Auto Loan FAQ: Understanding Interest Rates Discount for Auto Loans

Down payment or Loan-to-Value (LTV) discount - For loans with collateral, we offer discounts when the loan amount is fair relative to the value of the collateral. The way this works is in 2 different ways.

1. For auto purchases from a dealer - we use down payment as the metric to determine discounts as follows:
   1. If down payment > 10% = (-1%) discount
   2. If down payment > 20% = (-2%) discount
2. For auto refinance or private-party purchases - we use loan-to-value (LTV) as the metric to determine discounts as follows:
   1. If LTV < 90% = (-1%) discount
   2. If LTV < 80% = (-2%) discount

It's important to note that the pre-approval offer reflects the approved interest rate, taking into account discounts for new arrivals and good credit. However, it doesn't cover discounts related to the down payment or loan-to-value ratio (LTV). The final interest rate, which factors in the down payment and LTV ratio, will be determined once we have the bill of sale for the specific car you're interested in. Your loan contract will outline this final interest rate at the time of closing.

For example, a customer might receive a pre-approval with an interest rate of 10.99%, which already includes a 1% discount for having a good credit score. If the customer then makes a down payment of $4,000 (which is 20% of the $20,000 auto loan noted in the Bill of Sale), an additional discount of 2% would be applied. As a result, the loan contract would reflect a final interest rate of 7.99%.

Please let the dealer know if you're thinking about making a down payment on your car purchase. It's important that the down payment amount is clearly mentioned on the bill of sale. This amount is typically based on a percentage of the vehicle's sale price, not including taxes and dealer fees. For private-party purchases and Auto Refinance Loans, the loan-to-value percentage (LTV%) is used instead of a down payment.

We invite you to check out the information articles on Auto Purchase Loans and Auto Refinance Loans to discover more about the latest loan rates and terms. You might also find this interest FAQ helpful for understanding how interest rates impact your loan amortization - How my payment with interest is calculated?.